The Dow Jones Industrial Average (DJINDICES: ^DJI ) is a gold mine for long-term investors. It's particularly juicy if you're looking for high-quality income stocks, as these proven blue chips tend to deliver both high yields and reliable dividend growth. But there are stragglers in every herd, including this elite collection. Let me point out the three worst dividend stocks on the Dow today.
AA Dividend data by YCharts.
Bank of America (NYSE: BAC ) is a horrible income stock right now, any way you slice it. No other Dow stock even comes close to its feeble 0.3% yield. Annual payouts have plunged 97% over the last decade, and regulators keep a heavy foot on B of A's throat to prevent the troubled bank from over-stretching its financial reserves. That financial crisis in 2008 wrought devastation on Bank of America's dividend appeal.
Best Blue Chip Companies For 2014: International Business Machines Corporation(IBM)
International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. Its Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and maintenance services, as well as technology-based support services. The company?s Global Business Services segment offers consulting and systems integration, and application management services. Its Software segment offers middleware and operating systems software, such as WebSphere software to integrate and manage business processes; information management software for database and enterprise content management, information integration, data warehousing, business analytics and intelligence, performance management, and predictive analytics; Tivoli software for identity management, data security, storage management, and datacenter automation; Lotus software for collaboration, messaging, and so cial networking; rational software to support software development for IT and embedded systems; business intelligence software, which provides querying and forecasting tools; SPSS predictive analytics software to predict outcomes and act on that insight; and operating systems software. Its Systems and Technology segment provides computing and storage solutions, including servers, disk and tape storage systems and software, point-of-sale retail systems, and microelectronics. The company?s Global Financing segment provides lease and loan financing to end users and internal clients; commercial financing to dealers and remarketers of IT products; and remanufacturing and remarketing services. It serves financial services, public, industrial, distribution, communications, and general business sectors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. IBM was founded in 1910 and is based in Armonk, New York.
Advisors' Opinion:- [By Jim Cramer]
When this company talked about lofty EPS for 2015, initially the street was skeptical especially after IBM reported a blah quarter soon after the expectations were laid out. I now think the company has $20 earnings per share capabilities out three years and that $13 is doable for 2011. You keep the multiple the same and you get a $169 stock. I think it does just that. This one's cheap, way too cheap and it will be cheap next year, too, but on a bigger earnings base which is how it can get to my price target.
- [By Paul]
IBM. Emerging markets are a big growth driver for this computer systems and software provider. Not only that, Resendes says, IBM has "a bullet-proof balance sheet that will allow it to weather the current storm and position it for superior growth and profitability in the long term." He thinks the stock, which recently traded at $93, is worth $120 a share: ''There are some obvious companies that offer much bigger discounts, but you have to incorporate the safety factor. You're getting a premium company here that's a good spot to be in within the tech space."
- [By Peter Hughes]
International Business Machines (IBM) -- our aggressive pick for the year -- is one of the world's most dominant technology companies, with annual revenues of $105 billion and net income of $16 billion.
- [By Louis Navellier]
IBM (NYSE:IBM) is an international IT company made famous by its line of personal computers and various IT services. A year-to-date gain of 18% shows IBM stock has a lot to offer.
Best Blue Chip Companies For 2014: Apple Inc.(AAPL)
Apple Inc., together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.
Advisors' Opinion:- [By Kevin M. O'Brien]
Apple Inc. (AAPL) will reach $500.00/share at some point in 2012. I view Apple as trading at an extreme discount right now. I am expecting to see a run-up in price ahead of the company's next earnings call on January 17, 2012. I am also expecting that this earnings release is going to be absolutely fantastic. It would be a wise choice to block out all the negative rumors and sentiment surrounding Apple right now. This is a stock that is so attractively priced right now that it will not stay at this level for very long. Check back with me after January 17th next year.
- [By Michael Fowlkes]
Tech-giant Apple (AAPL) has seen its shares take a serious beating in recent months, but we believe the selloff has just about reached its end. The underlying fundamentals remain strong and we expect to see several new products next year. The concerns that have led to the recent sell off are real, but at the same time not as material as some would like you to believe. A big concern is theslowing of its earnings growth. Last year it had 100% earnings growth, but that has dropped to 23% this year.
You need to ask yourself, considering Apple’s size, is a 23% jump in earnings growth really a bad thing? Apple has become a victim of its own success, and is having a hard time keeping up with its past successes. This does not mean the company is in trouble, it just means that investors need to have a more realistic view of the company’s business. Once the current panic subsides, we believe investors will come back to the stock, and realize that it is a great value with its current P/E of just 12.
- [By Smith]
Temporarily becoming the most valuable company in the world last week, Apple has not been hurt very much by the recent bear market. In fact, for a great read about Apple’s story, consider taking a look at this article. With household names like iPad and iPhone, we all know that Apple is valuable … but the question is how valuable?Answering a question like that isn’t easy, but we believe the answer is up – way up. In fact, when compared to Google (GOOG)’s valuation metrics, this isn’t even that unreasonable. Apple’s price to earnings, price/earnings to growth, and price to sales ratios are 14.91, 0.61, and 3.45 respectively. Google’s numbers in these same categories are 20.34, 0.84, and 5.45 – all much higher. While competitors like Hewlett-Packard (HPQ) and Research in Motion (RIMM) may be a bargain for those hunting sub-8 price to earnings ratios, AAPL is still a good place to be. The most recent news affecting Apple has been Steve Jobs’s crazy new plans for company headquarters, but needless to say this will not have a huge impact on AAPL stock price. What will though is whether the company can keep up its knack for fresh technology that consumers love. While some may call this blind faith, we see it as an investment opportunity.The best time to buy AAPL stock is before their next biggest thing is announced – and that time is right now.
- [By Stephen Quickel]
Can Apple Inc. (AAPL) return to the $700 level? Whether its does or not, I suspect that the stock will be one of the outstanding comeback stories during the year ahead.
Indeed, even if it rebounds to $600 or so, that's a 20% gain. Most investors would settle for that. And chances are it will do much better over time, given Apple's knack for coming up with new products.
Short sellers have cleaned up since they began bum-rapping Apple in late 2012. Three observations are appropriate:- The short positions, while rising rapidly early in the fall, never amounted to more than a few percent of the outstanding shares at their peak.
- The stock was probably overdue for correction, having zoomed 9-fold since March 2009.
- The consensus of 50-plus Wall Street analysts covering AAPL still calls for 20%-plus a year earnings growth going forward, with a target price of $762.
Apple, in case you hadn't noticed, is selling iPads and iPhones at record levels while its stock has been under attack, in just about every corner of the world.
Top 10 Warren Buffett Companies To Buy For 2014: Chevron Corporation(CVX)
Chevron Corporation, through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The Upstream segment involves in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage, and marketing of natural gas, as well as holds interest in a gas-to-liquids project. The Downstream segment engages in the refining of crude oil into petroleum products; marketing of crude oil and refined products primarily under the Chevron, Texaco, and Caltex brand names; transportation of crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car; and manufacture and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It a lso produces and markets coal and molybdenum; and holds interests in 13 power assets with a total operating capacity of approximately 3,100 megawatts, as well as involves in cash management and debt financing activities, insurance operations, real estate activities, energy services, and alternative fuels and technology business. Chevron Corporation has a joint venture agreement with China National Petroleum Corporation. The company was formerly known as ChevronTexaco Corp. and changed its name to Chevron Corporation in May 2005. Chevron Corporation was founded in 1879 and is based in San Ramon, California.
Advisors' Opinion:- [By Louis Navellier]
Chevron (NYSE:CVX) provides support to its subsidiaries in the following fields: petroleum operations, chemicals operations, mining operations, power generation and energy services. While many stocks on the NYSE have underperformed in 2011, Chevron stock is up 8% year to date.
- [By Goodwin]
Chevron (CVX-N94.663.183.48%) is the world's second-largest energy company, after fellow Dow component Exxon Mobil (XOM-N73.951.121.54%).
But, analysts favour Chevron's stock, which receives positive reviews from 76 per cent of researchers in coverage. In contrast, Exxon receives positive reviews from 42 per cent of analysts, ranking third-worst in the Dow. Chevron is scheduled to report fourth-quarter results on Jan. 28. Its third-quarter adjusted earnings tally of $1.87 (reflecting 8.7 per cent year-over-year growth) missed the consensus forecast of $2.15 by 13 per cent, sending shares down modestly. The sales figure, at $49-billion, missed by 1.9 per cent. Chevron has integrated global operations and sells at a peer discount.
Its stock trades at a trailing earnings multiple of 11, a forward earnings multiple of 8.9, a book value multiple of 1.8, a sales multiple of 1 and a cash flow multiple of 6.2, 43 per cent, 52 per cent, 58 per cent, 67 per cent and 32 per cent discounts to oil-and-gas industry averages. Based on forward earnings, Chevron is the fourth cheapest Dow stock. It also pays a 72-cent quarterly dividend, translating to a 3.1 per cent dividend yield, seventh highest in the Dow. It has boosted the payout 7.9 per cent a year, on average, over a three-year span and 10 per cent a year, on average, over a five-year span. Chevron has $15-billion of cash, compared to $11-billion of debt.
Bullish Scenario: Macquarie expects Chevron's stock to rise 21 per cent to $114 in 12 months.
Bearish Scenario: JPMorgan, despite rating Chevron “overweight”, has a $90 target.
Best Blue Chip Companies For 2014: Visa Inc.(V)
Visa Inc., a payments technology company, engages in the operation of retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company owns and operates VisaNet, a global processing platform that provides transaction processing services. It also offers a range of payments platforms, which enable credit, charge, deferred debit, debit, and prepaid payments, as well as cash access for consumers, businesses, and government entities. The company provides its payment platforms under the Visa, Visa Electron, PLUS, and Interlink brand names. In addition, it offers value-added services, including risk management, issuer processing, loyalty, dispute management, value-added information, and CyberSource-branded services. The company is headquartered in San Francisco, California.
Advisors' Opinion:- [By Robert Holmes]
Company Profile: Visa is the global credit card company.
Share Price: $95.69 (Dec. 6)
2011 Return: 36%
Investment Thesis: "Visa is well-positioned to continue to capitalize on the electronic payments secular growth trend," William Blair analysts write of Visa, noting that secular growth of electronic payments is expected to average 10% to 12% globally over the next several years.
The analysts also say that Visa also enjoys very high incremental margins, which contributes to the company's attractive margin profile (59% in fiscal 2011) and strong free cash flow.
"Visa has a strong balance sheet and generates strong cash flow," the analysts write. "Visa had about $4.1 billion of cash and investments, $2.9 billion of litigation reserves, and no debt on its balance sheet as of Sept. 30, 2011. Guidance calls for more than $4 billion of free cash flow in fiscal 2012."
- [By Charles Sizemore]
One of the “big picture” economic themes that I expect to play out over 2011 and beyond is the secular shift to a global cashless society.?Though the process is well on its way in the U.S. and Europe, roughly 40% of all transactions are still made with cash and paper checks according to Barron’s.
This means that even in “boring” developed markets, there is ample room for growth in electronic payments. And there is no better company to benefit from this trend than credit card giant Visa (NYSE: V).
- [By Ed Carson]
The holiday season was hit or miss for many retailers, but indicators are that consumers were using plastic. Visa shares have risen steadily for the past seven months, with a strong 6% gain so far in 2013. Even in America, consumers continue to shift more from cash and checks to credit and debit cards. Overseas, consumers are adopting plastic, while some are bypassing cards and going straight to mobile payments. Visa wants to make sure it's part of that mobile solution.
Visa earnings growth has decelerated for the past two quarters from 30% to 24% to 21%. Revenue growth in the latest quarter picked up to 15%, matching the best gains of the past two years.
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